Why BDC Capital's Climate Tech Fund invested in Ayrton Energy's seed round

• Hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. It is essential for the decarbonization of heavy industry and transportation, and it is a key component of the trading of renewable energy worldwide.
• Natural Resources Canada’s Hydrogen Strategy for Canada estimates that hydrogen could reduce Canada's annual GHG emissions by 22 to 45 megatonnes of CO2e by 2030, and as much as 190 megatonnes by 2050.
• Ayrton raised US$6.7M from #climatetech venture fund investors to advance its liquid organic hydrogen carrier (LOHC) storage and transportation technology.
• Ayrton’s all-women founding team is technically and commercially strong, with complementary skillsets.

About Ayrton and its Recent Seed Capital Round

Ayrton Energy Inc., a liquid organic hydrogen carrier (LOHC) company based in Calgary, Alberta, is working to transform the hydrogen transportation and storage industry. It has just closed its US$6.7 million seed round, co-led by BDC Capital’s Climate Tech Fund and Clean Energy Ventures, in collaboration with a syndicate of #climatetech venture investors including Antares Ventures and EPS Ventures.

Ayrton will invest funding from this seed round towards pilot testing and optimization of its LOHC technology, growing and securing their intellectual property portfolio, and expanding its team with both technical and operational staff.

Ayrton’s current team is lead by Natasha Kostenuk, CEO and Founder, and Brandy Kinkead, CTO & Co-founder. Natasha Kostenuk is a mechanical engineer with over 20 years’ experience in the oil & gas industry where she spearheaded the roll out and implementation of new technologies, managed patent portfolios and led business development. On the other had, Brandy Kinkead, brings a depth of knowledge across chemistry and cleantech. Her previous work in battery membrane research forms the basis for the membranes in Ayrton’s reactor cells.

The Demand for Hydrogen and its Many Benefits

The demand for hydrogen is constantly increasing and it could provide up to 24% of global energy demand by 2050[1]. As stated within the Hydrogen Strategy for Canada, sectors such as transportation are fueling this growing demand. Hydrogen has widespread applications in various other sectors, including oil & gas and metallurgy, and its usage is anticipated to increase significantly.

Hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. It therefore does not produce greenhouse gases (GHG) and wider adoption could lead to significant GHG emission reductions. Hydrogen complements other energy sources for a net-zero future, and it can bring more energy resilience with its energy storage capabilities. Increased hydrogen adoption has the potential to close the gap in energy-intensive uses such as long-range transportation and as a feedstock in industrial processes. It is expected to deliver up to 30% of Canada’s end-use energy by 2050.

The Challenge of Hydrogen as a Fuel Source

Technical methods for hydrogen production and consumption are reasonably established, but significant storage and transportation constraints remain. Countries representing over US$9 trillion of global GDP will face difficulties in meeting energy demand with domestic renewable energy alone and will require the import of energy.?

?Why is transporting hydrogen so challenging? ?Hydrogen is flammable and corrosive, requiring stringent handling requirements.

Storing hydrogen is also challenging. When stored as a gas, it requires high-pressure containment systems, with tank pressures typically ranging between 350 –700 bar (5,000 – 10,000 psi). Alternatively, storing hydrogen in its liquid state demands cryogenic temperatures, given its boiling point of ?252.8°C.

The transportation infrastructure for hydrogen is both challenging and expensive. Steel pipelines, a common medium for conveying hydrogen gas, can cost up to 68% more than those used for natural gas, due to hydrogen’s corrosive nature.

?Ayrton’s Solution

Ayrton has developed a LOHC system that improves the transportation of hydrogen by making it safer and more cost-effective. This technology uses less energy while maintaining low operating temperatures, which makes it less carbon intensive and lowers operational costs. The technology can also use existing oil & gas infrastructure, which reduces capital costs. Together, these two benefits can enable faster adoption in key industries.

?Ayrton is building a proprietary system that uses a set of reactors. At one end, it bonds a proprietary LOHC with hydrogen gas and at the other end, it releases the gas from the carrier fluid (see the diagram below for a visual overview). The Hydrogenation (or H) cell is responsible for bonding the hydrogen molecule to the carrier fluid, while the Dehydrogenation (or D) cell is responsible for extracting the hydrogen out of the carrier fluid.

Ayrton’s LOHC is derived from a base molecule that is produced commercially at the million-tons-per-year scale, and then they add a proprietary mix of readily available chemicals. The resulting LOHC can be stored at room temperature, through existing oil & gas infrastructure. Ayrton estimates its carrier fluid can be reused thousands of times without significant degradation, based on its lab-scale results to date).

About Ayrton’s Seed Investors

About BDC Capital

BDC Capital is the investment arm of BDC, Canada’s bank for entrepreneurs. With over $6 billion under management, BDC Capital serves as a strategic partner to the country’s most innovative firms. It offers businesses a full spectrum of capital, from seed investments to growth equity, as well as fund investments, supporting Canadian entrepreneurs who have the ambition to stand out on the world stage. Visit bdc.ca/capital.

About Clean Energy Ventures

Clean Energy Ventures is beating back climate change through energy innovation. It funds disruptive, capital-light technologies and business model innovations that can reshape how the world produces and consumes energy. Each investment in has the potential to substantially reduce greenhouse gas emissions by 2050. Beyond funding, Clean Energy Ventures provides hands-on guidance through dedicated leadership coaching, strategic marketing, IP development and active board participation.

About Antares Ventures

Antares Ventures is a pioneering Deep Tech VC based out of Singapore that takes a strategic approach to investing in deep science-backed ventures globally that address sustainability and other macro challenges in Asia's Growth markets. The fund focuses on investment themes relevant to these markets, such as Energy Transition, Sustainable Food & Agriculture, Sustainable Cities, Transport and Infrastructure, Industrial Decarbonization, and Accessible Healthcare.?

About EPS Ventures

EPS Ventures is a corporate venture capital arm of Eastern Pacific Shipping based in Singapore. The firm seeks to invest in the maritime, supply chain, and sustainability sectors.

[1] https://data.bloomberglp.com/professional/sites/24/BNEF-Hydrogen-Economy-Outlook-Key-Messages-30-Mar-2020.pdf